Nigeria’s trade sector faces financing squeeze, profit margins slip – NESG

Limited access to financing was the most frequently cited constraint facing businesses in Nigeria’s trade sector in the first half of 2026, according to the Nigerian Economic Summit Group (NESG).

The finding is contained in the NESG’s report, Trade Sector Report: From High Volume Commerce to Productive Distribution, which examines the sector’s operating conditions, business performance and expectations.

The report shows that although traders recorded positive cash flow and access to credit, profitability weakened and businesses remained concerned about the cost and availability of financing.

Financing tops trade sector constraints

The NESG’s H1 2026 constraint rankings placed limited access to financing first, with a score of 12, followed by inadequate power supply, unclear economic policies and the cost of commercial lease and rental property, which each scored 10.

• “The H1-2026 constraint rankings identify limited access to financing as the most frequently cited constraint, with a score of 12, followed by inadequate power supply, unclear economic policies, and the cost of commercial lease and rental property, each scoring 10,” NESG stated.

The report noted that financing had moved from second place in 2024 to the leading constraint in H1 2026, despite the Access to Credit Index remaining in expansionary territory at 112.0.

• Inadequate power supply ranked second in H1 2026, with a score of 10.
• Unclear economic policies also scored 10, placing third.
• The cost of commercial lease and rental property ranked fourth, with a score of 10.
• Availability of foreign exchange ranked fifth, with a score of 8, down from first place in H1 2025.

The NESG said the continued prominence of financing constraints suggests that access to some credit does not necessarily mean businesses can obtain funding at suitable costs, scales or repayment periods to support expansion.

It also described the declining prominence of foreign exchange availability as an encouraging development for the sector.

Profit margins weaken despite cash flow

The report’s financial indicators show that traders maintained relatively supportive liquidity conditions in H1 2026, but profitability came under pressure.

The Access to Credit Index stood at 112.0, while the Cash Flow Index was 121.9, both indicating expansion. However, the Operating Profit Index declined to 98.1 from 102.9 in H1 2025, moving marginally into contraction.

• The NESG said the difference between positive cash flow and weaker profitability suggests that businesses continued to generate transactions and maintain liquidity, even as their profit margins came under pressure.
• The report also highlighted a gap between current business conditions and expectations. The Future Business Expectations Index reached 156.1 in H1 2026, compared with the current Overall Index of 102.6.

Despite the strong outlook, the Future Investment Index remained neutral at 100. This suggests that traders were optimistic about future turnover and operating conditions, but the expectations had not yet translated into a clear expansionary investment outlook.

Nigeria’s merchandise trade expands

The report’s findings come amid growth in Nigeria’s merchandise trade. The country’s total merchandise trade rose to N41.44 trillion in the second quarter of 2026, representing a 5.61% increase from the N39.24 trillion recorded in the corresponding quarter of 2025.

Nairametrics previously reported that the country’s merchandise trade surplus surged to N7.55 trillion in the first quarter of 2026, up 340.88% from N1.71 trillion in the preceding quarter.

The trade sector also contributed 17.89% to Nigeria’s Gross Domestic Product (GDP) in the first quarter of 2026.

The NESG’s findings indicate that, despite growth in trade activity and positive cash flow conditions, access to suitable financing, infrastructure challenges and pressure on profitability remain important concerns for businesses in the sector.